Conversation starters: DIY investors

The Conversation Starter is always in search of insights of use to advisors. The latest ramble ‘round the internet led us to look into what’s going on with do-it-yourself investors.

It might be safe to say that www.intuit.com is one of the great touchstones for the DIY financial crowd. Some things you might not know:

Intuit ranks 177th in the US in terms of web traffic and is linked to by nearly 29,000 other sites.

Its audience, according to web analytics site www.alexa.com, is predominantly female, middle aged, and has at least some college education.1

Website traffic Oct 14, 2011

Website ranking and predominant U.S. viewer attributes reported by alexa.com on October 14, 2011 Rank is calculated using a combination of average daily visitors and page views to these websites from a U.S. audience over the last 3 months. The site with the highest combination of visitors and page views is ranked number 1. This rank is updated daily.

But Intuit is famous for tax prep and accounting. What does this have to do with investing? Well, it turns out the company also owns Mint.com, a six year old business/site with 6 million users that helps you “Set a budget and create a financial plan to reach your financial goals.”2 Returning to Alexa we find the following:

Mint ranks 512th in the US in web traffic

Its audience is disproportionately “educated, higher-income, childless women under the age of 35” who browse from home.3

Just to put that these statistics in perspective, www.morningstar.com clocks in at 1,516 in US traffic. “Compared with internet averages, Morningstar.com’s users are disproportionately Caucasian, and they tend to be highly educated, childless men earning over $60,000 who browse from work.”4  www.fidelity.com, another DIY touchstone, ranks 307rd in the US.

Startup for affluent households

And now this, another online service from the former CEO of Intuit and Paypal, this one aimed at affluent households with hundreds of thousands to a few million to invest:

Bill Harris has spent his entire career at the nexus of the financial and technology industries, first as the CEO of Intuit, then PayPal, and then as an investor over the past decade. Now he is bringing all of his experiences together in his latest startup Personal Capital which is launching today after two years in development with 40 employees and $27 million in capital . . . connects to all of your personal financial accounts from banks, brokerages, and 401(k)s to mortgages, credit cards, and loans. It presents your financial life in easy to read charts and graphs like Mint, except that its overarching goal is to help you come up with the best asset allocation and convince you to manage your money through one of its financial advisers.
The analytics are free, but the financial advisers are not. Personal Capital charges a management fee of just under 1 percent of assets managed, which is all-inclusive of brokerage and other fees. “In some ways Silicon Valley does not really get it about financial services,” Harris tells me. “We think software is the answer to everything. Financial services doesn’t get it either, they don’t use technology to augment their interactions with customers.”5

While the business is just getting going, we can once again learn from Alexa something about the traffic www.personalcapital.com is attracting.  It is disproportionately younger (25 to 44) educated (grad school), male, and with children.6  One can only speculate about the future ownership of the company, but the pedigree of the founder is noteworthy.

What to conclude?

  1. DIY sites like Mint crush traditional broker sites usage like www.ml.com (1,923 rank in U.S.7) or www.smithbarney.com (4,555 rank in U.S.8). Surely some of these users are true DIY investors; many more are likely using services like Mint to help them keep track and make their own decisions.  There is a very good chance your clients are using sites like Mint and Personal Capital.  It might be worth a conversation.
  2. The preponderance of women visiting www.Mint.com, and presumably using the service adds to the puzzle. Is this a statistical anomaly? Is it a function of the firm’s marketing? Is there a message here about women investors? Think about how you talk to your women clients. Are you giving them the information they want and need, in the way they want and need it, or are you just going with what you know?

And now, www.personalcapital.com. Like Mint, it also skews younger and more educated than what Alexa describes as the norm. This one bears watching for two reasons.

  1. The first is pure demographics. Advisors are disproportionately older ( 48.6 years9) serving an older customer base. Enterprises like Mint and Personal Capital appear to be targeting and winning with the next generation of investor.
  2. It may be tempting to think that Personal Capital can’t succeed, that it won’t take business or clients from advisors, and/or that it won’t have a material impact on how firms and advisors do business. Then again, maybe not. That’s what people said about www.mint.com in 2005.

1 http://www.alexa.com/siteinfo/intuit.com#

2 https://www.mint.com/what-is-mint/

3 http://www.alexa.com/siteinfo/mint.com# as of October 14th, 2011

4 http://www.alexa.com/siteinfo/morningstar.com# as of October 14th, 2011

5 Former Intuit CEO Bill Harris launches Personal Capital” by Erick Schonfeld, www.techcrunch.com, September 20, 2011.

6 http://www.alexa.com/siteinfo/personalcapital.com as of October 14th, 2011

7 http://www.alexa.com/siteinfo/ml.com# as of October 14th, 2011

8 www.morganstanley.com/online as of October 14th, 2011

9 Cerulli Quantitative Update: the advisor age databank 2010.  Cerulli Associates, in partnerships with the College for Financial Planning Association, the Investment Management Consultants Assoc, and Morningstar

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